Energy panel Republicans chastise EPA over handling of fraudulent credits

Source: Amanda Peterka • Posted: Tuesday, February 7, 2012

Top Republicans on the House Energy and Commerce Committee are pressing U.S. EPA to release information on its renewable fuels program on the heels of an announcement that a Texas-based biodiesel company created and sold millions of fake credits.

Committee Chairman Fred Upton of Michigan and Energy and Power Subcommittee Chairman Ed Whitfield of Kentucky aren’t going after companies for producing fake credits but are instead targeting EPA, saying the agency made “a bad situation worse.” The program has “adversely impacted” small biofuels producers and left the renewable fuels marketplace in turmoil, the lawmakers said.

“The costs of this turmoil ultimately will be borne by consumers,” the lawmakers said in their letter sent Friday to Margo Oge, director of EPA’s Office Transportation and Air Quality. “These fraud and abuse issues in the RFS, and our understanding of EPA’s related enforcement practices, may lead to a need for Congressional action.”

Under EPA’s renewable fuels program, credits are represented by unique Renewable Identification Numbers, or RINs. Over the past year, EPA has been investigating abuses of the program, and on Thursday, the agency issued a violation notice to Texas-based Absolute Fuels LLC for allegedly creating and cashing in on 48 million fake credits worth approximately $62 million (Greenwire, Feb. 3).

Previously, in November, EPA issued violations to 24 companies for purchasing $9 million worth of invalid biodiesel credits from Clean Green Fuel LLC (Greenwire, Nov. 16, 2011).

According to Upton and Whitfield, both the abuses and EPA’s investigations have made it “very difficult” for companies to know which RINs are valid. They criticized EPA for issuing violations in November to the companies that unknowingly purchased fake credits.

The lawmakers have asked EPA to provide by Feb. 15 a chronology of its actions related to Clean Green as well as its communications with the companies that purchased the fraudulent credits. They have also asked for “the specific steps” EPA is taking to reduce uncertainty in the renewable fuels marketplace.

“We want to be sure restoring functional RIN markets is done expeditiously and in an equitable manner,” they said.

Last year, EPA sought comment on whether companies that purchase fraudulent credits should be subject to violation. In a final rule setting fuel standards for the year, the agency said it decided to not change the liability sections of the renewable fuel standard.

EPA “believes that the ‘buyer beware’ aspect of the RIN trading program is one of the cornerstones of the program,” according to the rule posted in the Federal Register on Jan. 9. “It provides an important incentive for the regulated community to comply with the regulations and mandates due diligence on the part of all RIN buyers. It encourages self-policing on the part of RIN generators, owners and users in order to keep the program functioning smoothly.”